With ambition to accomplish a mission and the desire for vigorous assistance, a foreign investor turned to HANSE Interim for support.
The Assignment
A European investor was looking for an experienced Interim COO to assist in reorganizing the structural and procedural organization in the operative sector of a long-established company that he had aquired earlier. These measures needed to happen within half a year and through the process of implementation the interim manager was to ensure the lasting competitivity of the company.
The investor had acquired the company, which was making 50 million euros revenue, one and a half years earlier. He had given the previous owner the opportunity to continue producing high tech lighting products, under the condition that the partnership business would be reduced by 20 % per annum, step by step.
The business volume generated by this process was planned to foster a pure manufacturing facility which should distribute self-developed products under an own brand, in a self-built market. These were the ideal and most just conditions under which to preserve the industrial location and to expand the company for it to become autonomous. There are not many investors out there who pursue such a positive, employee-friendly strategy and who determinedly declare the merchandise mark “Made in Germany” an appealing means of marketing their product.
The Challenge for the Interim COO
HANSE Interim hired interim manager Wilfried Sellmann for the position of COO. He has more than 25 years of experience in management in medium-sized industrial companies, including international businesses. More than once, Mr. Sellmann has succeeded in not only preserving, but expanding German and European production locations by determinedly applying lean process management and integral process cost optimization as well as using global sources.
After having conducted a two-weeks long quick scan, it soon became apparent that the challenge of the mission was to constructively eliminate the enormous overhead structures. These structures did not support the employees working directly on the product, at best, they served to manage them.
In personal bottom-up staff meetings, several employees told Mr. Sellmann that immediate superiors often disregarded their complaints with regards to the process or their suggestions for improvement. They said that sometimes, the superiors even implemented them under their own name. Every idea for a CIP (continuous improvement process) that any of the about 200 operative employees had ever had, had thus been thrown away completely.
The innovative potential needed to improve the operative process and create new products that were absolutely necessary was not harnessed at all, due to a hierachical, multistage organizational structure which was divided into departments for all operative functions (engineering, department management, QA) of which each had its own “ruler” (the department manager) and a lack of constructive and targeted communication. But the potential was there. The interim manager quickly had to come up with a new vision for the company and a lean management model to create an impactful, fast, customer and employee-oriented process landscape
All of the departments were of equal importance, while the logistical and technical manufacturing processes and products were quite different from each other. Only two of eight department managers were qualified to accompany the process, due to their operating experience and their will to change and improve processes. They bore the responsibility of all functions, both with regards to staff and all technical aspects, to avoid that the departments might start to playing the blame game.
The Implementation
A precise plan to comprehensively start the change management at several points in the process had been put in place. Both the investor and the locally responsible executive director, who was now able to fully concentrate on his core competencies of market development and product development, courageously approved the lean process model. In theory, this would have given the interim manager the ability to start the implementation process after a month. Had there not been the works council, which was legally subject to co-determination…
The works council responded in a rather traditional manner, negative and full of fear to a shocking extent. Indeed, the works council found that the operational changes and changes in staff were absolutely positive, albeit rather strange, but at the same time, it anxiously called attention to deadlines and necessesary but hindering bureaucratic procedures. Fortunately, the works council itself called in an external consultant, who judged the plan to be positive and necessary, but who had to serve the interests of his direct contracting authority, namely the works council. He handled the extremely difficult situation very well.
After having conducted intensive meetings with the interim manager, the external consultant approved the implementation of the process, provided that all changes would initially be declared as project tasks, not subject to co-determination. The executive director, the interim manager and the works council all played an equal part in the process and communicated closely, also publishing a joint key issues paper. All of the measures taken in this constructive approach ought to strictly “serve” CIP.
All overhead employees moved into a single production office (they had been working in offices far apart before that) and in that way, they were able to communicate effectively.
Using methods such as Kaizen and FMEA, which had often been proposed by direct employees, the company initiated over 30 CIP projects working on products and processes.
A number of “Eureka!” moments occurred, for example in engineering or production control. Both process owners were extremely busy with managing the new drive for improvement both in terms of time and capacities. They had to prioritize. Key process indicators and objectives that were easy to understand and had been newly developed served to provide some motivation and orientation with regards to the question: “What’s the use of all this?”. The interim manager carried out leadership training sessions and individual coaching sessions. In doing so, he was able to targetedly shape the management culture of the location, which had long been neglected. Mr. Sellmann applied both bottom-up and top-down approaches.
The Result achieved by the Interim COO
The interim manager designed all activities so that they would serve as a sustainable and effective preparation for the successful entry of a COO, who was to be sought externally. All unsuitable processes were eliminated courageously, and new structures established a solid basis for the future. After only 6 months, Mr. Sellmann gladly handed over a very lean organization with a measurable increase in productivity of more than 9 per cent (with further double-digit potential). This had been envisioned by the owner and it provided an implementation roadmap full of ongoing CIP projects for the future COO.
Conclusion
Made in Germany – Mission: Possible!
